If you have an income of over £200,000 and assets of at least £2 million, the taxman may ask to speak to you before you file your tax return. Why? It’s part of a scheme that HMRC hopes will prevent wealthy individuals from making mistakes with their taxes.
According to the the Chartered Institute of Taxation, HMRC is asking up to 1,000 individuals to take part in a phone call this autumn. The authority says that it wants to discuss “unusual or one-off transactions, uncertain tax treatments and changes in their circumstances which have an impact on their tax affairs”.
Do wealthy individuals have to take the call?
If HMRC asks you to take part in one of these calls, you can refuse. They are completely voluntary. According to ICAEW, “HMRC has confirmed that if any taxpayer decides not to take part in the pilot, this will not be considered a concern.”
Should I take part in a pre-filing call?
It’s entirely up to you whether you take part in a pre-filing call with HMRC. However, some experts caution against doing so. They worry that, if you disclose something the taxman doesn’t agree with, you could risk higher penalties. This is because, after submitting your tax return, HMRC might argue you knowingly provided incorrect information. This can carry a penalty of 35% – 70% of tax owed. This is in contrast to a 15% – 30% penalty for a disputed tax liability.
Part of the problem is that tax rules are complex. Most wealthy individuals will not be fully up to speed with the latest tax law, which can result in misunderstandings. Consequently, if you do decide to go ahead with a pre-filing call, we strongly recommend you request that your accountant takes part.
ICAEW also recommends that you should request a pre-discussion with HMRC. This will allow you to clarify what will be discussed and who will attend. Indeed, you can ask that your accountant takes part in the call instead of you.
If the taxman gets in touch, call THP
It’s clear that HMRC is targeting people with high incomes to maximise their tax take. If HMRC gets in touch and requests a meeting or information, we strongly recommend you talk to your accountant before taking any action. If you are a THP client, get in touch with your account manager and we’ll advise you on what steps to take next.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.